My Own Analyst

ANV

I am almost done with this call, and I can't emphasize enough the risk here.  While the company could get rescued, I am not sure that it can avoid bankruptcy, especially if gold prices fall further.  Their CapEx is locked in for this year ($200mm more) and they will need to spend $25mm next year.  No one will trust this management team.  First, they said no equity sale, then they sold equity.  The new CEO affirmed guidance and was flat out wrong - the operational issues were much worse than protrayed.  As long as gold is weak, the likelihood of acquisition is low.  This stock was one of my four picks for Q3 in a contest (along with a short in TPX and longs in MAKO and MASI), so I am bummed to say this, but I think it's dead money for a while at best.

Whoops!

Scratch that last post - it's a negative for ABX, as Chile has blocked a project.  ANV is all domestic, something the market doesn't appreciate.  Peru has been giving NEM problems...

Heads-Up on PMs

ABX and SLW halted - likely ABX bidding for SLW.  Might wanna pick up some ANV at 7.40 (or other smaller players).

ANV Question

I feel like buying at $9.5 but the management credibility is bothering - first claiming the are fully funded and then raised cash... would you still consider it worth watching and buying at some level or would mark it ignored?



This is a great question.  I agree, on the one hand, but I also think that this removes a gun. With that said, it reminds me of the MAKO financing (that stock sure hasn't done well!).  If I had a slot available (I will on Friday), I might take a stab on ANV.  It's oversold, for sure.  I would like to see some updated numbers regarding earnings - they will be a lot lower after dilution and lower gold prices and lower production.

 

ANV Halted

ANV posted that it is considering scaling back its Hycroft expansion.  This will result in lower earnings in the out years but less pressure to dilute.  I am not fully up to speed yet and will be back later if I learn more, but I wanted to share the news:

http://finance.yahoo.com/news/allied-nevada-evaluating-phased-approach-132816565.html

 

Melting Commodities

The sell-off in gold accelerated overnight - it's down over 5% and pushing 1400.  It's worse for silver.  Oil, too, is breaking to new lows and down over $2.  I have been very wrong about gold in SSETF model, but right, I suppose, on having little or no Energy in the other models.  Cypus is being forced to sell gold, but the bigger issue is that global growth remains biased towards contraction rather than expansion.  China reported GDP of 7.7% growth, slightly less than expected.  This gold plunge seems pretty extreme, but I thought Friday was extreme.  We are adding NEM to my Conservative Growth/Balanced model today, and that model seems to have all the luck when it comes to timing!

$ANV and $NEM

I almost went with ANV instead of SMCI.  The Fed early-released, and there is pressure on gold due to the belief that QE could end soon.  I think ANV should hold 13.70 area...

I am watching to see what the analysts do with their 2.65 estimate for 2014.  Even at $2, the stock is dirt cheap!  2013 consensus is 1.36, but this has been declining, as it was 2.24 six months ago.  At 14, it is still 2.8 oversold.  GDX at 35 is -1.38.  NEM at 39 is -1.02 (a more conservative way to go).

ANV Update

A friend of mine that owns ANV (I just learned this today) caught the call and said:

"Great conference call, very reassuring."

 

I will catch it later, but this stock has suffered from a void of information.  It's a black 5 now and could keep bouncing.  It's very hard to call a falling knife and wish I had mentioned it earlier than I did.  Hopefully the worst is over.  I think the space is very oversold and this one horribly so.  I will be looking for spots to say "add" potentially assuming I too like what they said on the call.  With that said, I see no reason why there should be any selling up to 17-17.50 or so.  GDX too has bounced nicely...

ANV

Allied Nevada put out a press release last night and is hosting a conference call today.  This stock has been absolutely hammered in a tough environment for gold miners.  It's still very oversold at 13.71.  If anyone has hung with it, I think the stock could retrace a lot from a technical perspective, but I am still lacking as good a fundamental understanding as I would like, especially related to their CEO firing.  This is the part that I think investors liked:

The capital cost estimate for the expansion project remains at $1.24 billion. To date, we have purchased or have fixed contracts in place for approximately $720 million, or 58% of the total capital budget. Management continues to believe that the remaining capital to be committed of $523 million is sufficient to complete our expansion project within our estimate of $1.2 billion, with start-up in the first quarter of 2015.

 

I did pull LUFK from the watchlist and added NEM...

 

 

King Dollar

The big story this morning is that the $ is much stronger vs. the Yen and the Euro.  Japan's monetary authority is pushing for 2% inflation and announced huge asset purchases.  The Yen fell over 2% and Japanese stocks bounced 2%.  Similarly, the Euro is weaker too.

The strength in stocks this year has been on the back of Yen depreciation, which is good from a  global economic growth perspective but bad for certain exporters (to Japan).  One of the reason the device guys have done well the last month or so (BCR, BDX, etc.) is that the Yen had retraced some of the weakness.

The big story, though, is gold - this is not good that the dollar is strenghtening, at least for now.  We are close to the 52-week low for GLD.  A subscriber was asking about ANV, which, along with other gold stocks, is getting slammed.  There is a natural inclination to buy at such "low" prices (and don't let me stop you), but keep in mind that the sector is in free-fall.  Longer-term, I think that as we swing towards inflation fears, gold miners will do better.  Unfortunately, the market is telling us slow growth and low inflation are the most likely outcomes.

A final observation:  Today is the 4th business day, and pre-announcements are strangely lacking so far.